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City needs caution in dealing with developers

In July, I wrote a letter pertaining to the proposed hotel complex that some people think that tax dollars, aka grant money, aka manna from heaven, should be used to fund some “developers'” dreams. It doesn’t work. These people are just here for a handout at our expense. Here are my figures to back that up.

Just over a week ago the Times Observer published the listing of back due property taxes. The area of a previous “development” utilizing our tax dollars, the south side of the 300 block of Pennsylvania Avenue and the adjacent “river front” property owes $473,788.36 in back taxes. Almost a half million in back taxes.

How does that compare to the rest of the city? Well, the entire rest of the city owes approximately $468,000 in back taxes. The entire rest of the city owes less than half of what one development owes. Nearby Conewango Township is only owed approximately $208,000 in back taxes.

Handing a developer millions of dollars in free money, giving them free land and offering them no or reduced taxes for a certian number of years does not work. They have nothing at risk. They are going to make their money and they don’t care what happens to the development.

If a person has risk involved, such as a large sum of their own money, they are going to work to recoup that money and make more profit. It’s the American way, or at least it was.

Another example of granting free monies and tax breaks is the old Struthers Building. A prominent person set up shop there after the city declared it a Free Enterprise Zone or something to that effect. No or reduced taxes for 10 years. At the 10-year mark the owner pulled stakes and moved to New York state to a fresh tax-free zone. And how about the Liberty Street development where $100,000 in grant money couldn’t be accounted for and nothing was finished?

If this hotel complex is such a fantastic idea and an investor can see great profit potential in the operation they will invest their own money and build it. And they will push it, promote it and advertise it so that it makes them money and continues to make them money for many years.

Many years ago two local business groups, or individuals, proposed building hotels in town. One proposed building the Holiday Inn on Ludlow Street. The other proposed building a hotel complex at the now location of the Eagles Club. Once the Holiday Inn was built the other person ceased construction as they knew that there wasn’t enough business in town to support two major hotels. The Holiday Inn flourished and the east side was left with a concrete foundation. Smart move on that person’s part. He knew he would have money at risk and would not profit so he cut his losses.

I think when a hotel developer looks at the occupancy of the three major hotels in the Warren area they will see that the potential for a profitable hotel is quite slim. But they should have the choice to invest their own money or pass, not be handed so much money that they will profit just by building it with the free handout money. That is how these so called “developers” make their living, living off of grant money. They never leave broke.

Lou Dussia is a Warren resident.

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